Credit Institution Supervision

Banking supervision within the Central Bank of Ireland is undertaken by three separate interdependent divisions

• supervision division
• inspection division
• analysis division

The banking supervision division is comprised of supervision teams for both large domestic focused retail credit institutions and generally smaller more internationally focused credit institutions which may be subsidiaries of less significant institutions and branches.

The on-site inspections division carries out inspections. A specialist horizontal function division gives guidance to the other divisions in the supervision of credit institutions by providing services such as expert input in the areas of internal models, crisis management, regulatory reporting and analytics, stress testing and authorisation requests.

Since 2014 the EU Single Supervisory Mechanism has meant that the European Central Bank is the principal regulator of significant institutions for prudential purposes. The (Irish) Central Bank has a subsidiary role in relation to other supervisory elements

In the case of other institutions, the Central Bank supervises them directly with the European Central Bank having an indirect role.

Application for Authorisation

An applicant for an authorisation as a credit institution should refer to the Central Bank’s checklist for completing and submitting bank licence applications. There is a checklist dealing with requirements regarding a third country branch.

The initial phase is an explorative phase during which the potential applicant will having first engaged in detailed discussions with the Central Bank, submit a proposal to the Central Bank for review. The Central Bank in conjunction with the ECB where applicable, will conduct a detailed review of the proposal and issue comments advising of further information and clarifications required in respect of the proposal. It considers whether the proposal will meet the required standards for authorisation.

A formal application follows. It is assessed by the Central Bank and European Central Bank which may involve further clarification and queries. A final decision is issued by the European Central Bank or Central Bank as the case may be.

Regulatory Requirements

The Central Bank published details of its regulatory requirements for credit institutions. There is a range of prudential requirements and authorisation and supervision requirements.

There are requirements relating to acquisition and disposal of holdings above a certain level in credit institutions. Guidance has been published by the European supervisory authorities joint committee.

The Central Bank is the competent authority for monitoring and reviewing compliance with money-laundering legislation.

The Central Bank’s consumer protection directorate is responsible for the development imitation and supervision of financial conduct of business regulations for all entities during credit institutions

The European Central Bank or the Central Bank is responsible for the fitness and probity assessments of the management board and key function holders in the case of significant credit institutions and the management board of all credit institutions

There are limits on sectoral borrowing and reports. There are requirements in respect of impairment validations

A recovery plan is required demonstrating credible recovery options that will be deployed in the event that the viability of the institution is affected.

Investment Activity

The MIFID directive and regulation applies to investor and investment related activities of credit institutions. MIFIR introduces a transaction reporting regime. It provides new standards and formats. It incorporates additional financial instruments and trading venues to the earlier version of MIFID.

A systematic internaliser is an institution that on an organised frequent systematic and substantial basis deals on its own account when executing client orders outside regulated market a multilateral trading facility or organised trading facility. Systematic internalise is are subject to obligations under MIFID and MIFIR including notification of the Central Bank when it becomes a systematic internaliser.

The Central Bank publishes a register of tied agents of credit institutions within the state.

Reporting Obligations

Credit institutions have an obligation to report information on an ongoing basis to the Central Bank. There is a schedule of reporting dates quarterly or more regularly. Returns must be uploaded to the online reporting system in eXtensible business reporting language using the relevant EBA taxonomies.

Credit institutions must report new clients or changes in clients through the new client’s information schedule where large exposures obligations return applies. There is a code of practice on learning to related parties. Mandatory obligations apply. There are a range of other reporting obligations